The coronavirus, it is said, does not discriminate among its victims. But at least one potential target is proving particularly resilient: the Birkin bag. Hermes International, the French luxury goods group that makes the pocketbooks that sell for $10,000 and up, reported that first-quarter sales fell 6.5%, but bested those of its erstwhile bling rivals. Despite lockdowns and travel restrictions, Hermes shares have held up in 2020. It’s now worth nearly 25% more than Gucci-owner Kering and commands more than twice its valuation.
The crisis is far from over. While Hermes shops have reopened in Greater China and Korea, the rest of the world is still in shutdown mode. Worryingly, a second wave of infections has prompted countries including Singapore, Australia and Thailand to close malls again in April. This means about three-quarters of Hermes’ luxury network is currently inaccessible to clients.
Luckily for the 183-year-old French group, Chinese clients coming out of the quarantine have not lost the drive to splash money on expensive bags or other extravagant items – including a diamond-studded Birkin at a boutique reopening in Guangzhou. Chief Executive Axel Dumas said sales in mainland China have been growing at double-digit rates after shops reopened.
The secret of Hermes’ relative success may lie in its skew towards super-rich and slightly older clientele. Unlike fashion brands such as Gucci or Moncler, Hermes has not been so reliant on potentially now-poorer millennials to grow its brand. With the pockets of its wealthy customers relatively intact, investors may be right in betting that the firm led by Dumas will ride faster through the crisis.